Bombardier Inc

Bombardier Inc (TSX: BBD.B) is an industrial engineering company, which is engaged in the manufacturing of trains and planes. The Group’s operations are divided into two reportable segments being transportation and aviation. The Company operates globally through its subsidiaries, which include Bombardier Transportation Canada Inc, Bombardier Transportation Australia Pty Ltd, Bombardier Mass Transit Corporation, Bombardier Transit Corporation, Learjet Inc, Bombardier Services Corporation, Bombardier Aerospace Germany GmbH and Bombardier Aerospace Corporation.

Recent News

On 5^th June 2020, Bombardier Aviation announced to make adjustment in workforce and operations to emerge from the present crisis. The Company has decided to reduce the workforce by 2,500 employees (approximately). Due to pandemic, the business of jet deliveries across the industry is expected to be down by around 30 per cent versus last year.

Financial Highlights – Q1 Financial Year 2020 (31^st March 2020)

(Source: Quarterly Report, Company Website) 

In the first quarter of the financial year 2020, driven by an increase in the revenue from Transportation business and Aviation business, the revenue increased by 5 per cent to USD 3,691 million versus USD 3,516 million in Q1 FY2019. The adjusted EBITDA declined by 36 per cent to USD 171 million in Q1 FY2020 versus an adjusted EBITDA of USD 266 million in Q1 FY2019. The adjusted EBIT declined by 65 per cent to USD 60 million, while reported EBIT declined by 77 per cent to USD 156 million for the period. Net loss for the first quarter of the financial year 2020 stood at USD 200 million. The diluted loss per share stood at $ 0.11 in Q1 FY2020 versus diluted earnings per share of $ 0.08 in Q1 FY2019.

Share Price Performance

Daily Chart as of 12^th June 2020, before the market close (Source: Thomson Reuters)

Bombardier Inc shares were trading at CAD 0.51 at the time of writing before the market close on 12^th June 2020. Stock's 52 weeks High is CAD 2.46 and Low is CAD 0.38.

Key Risks

The market conditions in which the company operates is full of challenges and might impact the operational performance and reduce financial performance as well. Any change in regulations and government policies could affect the overall business of the company. Liquidity and interest rate risks could affect the operations of the company.

Conclusion

The company has shown a decline in financial performance in the first quarter of the financial year 2020. The top-line performance has improved, while the bottom-line performance has declined significantly and remained in the negative zone for the period. The revenue from core operations has increased, while the cash balance for the period has declined. The group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and return with capital discipline and reducing its costs to preserve cash. The Group’s outlook for transportation business remained decent with a strong backlog of USD 33.1 billion for the quarter. The aviation business is significantly impacted by the outbreak for covid-19, and the Company has decided to reduce its workforce to maintain operational performance.

Based on the factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of CAD 0.51 (as on 12^th June 2020), with support from few catalysts needs to be evaluated at a later stage.

Disclaimer

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